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Certified Financial Planner Board Takes Disciplinary Actions Against 23 Advisors

Recently, the Certified Financial Planner (“CFP”) Board of Standards (“Board”) took disciplinary action against 23 financial advisors, permanently revoking the CFP designation for three of those financial advisors.  The CFP designation is a professional certification mark for financial planners conferred by the Board and demonstrating that the recipient meets certain education, examination, experience and ethics requirements.  Formed in 1985, the mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP certification and upholding it as the recognized standard of excellence for personal financial planning.  There are approximately 71,000 financial advisors who hold the CFP designation.

Financial advisors with the CFP designation must follow the CFP Board’s Code of Ethics and Professional Responsibility and Rules of Conduct (“CFP Rules”).  The CFP Board may conduct investigations into conduct by financial advisors that potentially violate the CFP Rules.  These investigations can lead to private censure, a public letter of admonition, suspension of the right to use the marks for up to five years or permanent revocation of the CFP designation.

CFP Board investigations can be triggered by customer arbitrations, criminal matters, regulatory actions by the SEC, CFTC, FINRA and state regulators, bankruptcies, employment terminations, requests from other financial advisors with the CFP designation and anonymous tips.  The process begins through a Notice of Investigation sent by the CFP Board.  The CFP Board will explain the general allegations made, and the financial advisor is provided an opportunity to file a written response to the allegations.  After reviewing the response, the CFP Board may decide to issue a Complaint against the financial advisor, who must then file an answer.

The CFP Board rules provide for a hearing before a three-member panel and within thirty days of the hearing, the CFP Board will issue a written decision.  Financial advisors have the right to counsel throughout the CFP investigation and enforcement process.  There will be times where a CFP enforcement action may be resolved through a settlement, without proceeding through a hearing.

According to news sources, the following financial advisors’ CFP designations were recently revoked:

  • Joseph M. Browne with Summit Wealth Partners in Jacksonville Beach, Florida, for misrepresenting the manner of his compensation method on the CFP Board’s website.
  • Michael A. Zolondek, formerly associated with Princor Financial Services in Mauston, Wisconsin, lost his CFP designation after he was permanently barred by FINRA helping approximately 300 examiners cheat on Life Underwriter Training Course exams, among several other infractions.

The CFP Board also suspended nine financial advisors for the following misconduct:

  • Scott A. Brooks, affiliated with an Ameriprise Financial branch in Edgewood, Kentucky, lost the right to use his CFP certification marks for one year after failing to file state and federal income tax returns, resulting in tax liens of over $1 million. Additionally, Mr. Brooks also failed to make timely updates to his Form U4 to report these liens.
  • Brett Fellows, managing member of Oak Capital Advisors in Mount Pleasant, South Carolina, lost his right to use the CFP certification mark for one year after he allegedly misrepresented that forms utilized to transfer customer accounts to a new broker-dealer were merely administrative.
  • Roy Dwane Johnson, of Ajz Consulting in Raceland, Kentucky, was suspended for four years after he allegedly misappropriated member firm funds by submitting false records regarding reimbursement claims for personal expenses.
  • Candy J. Lee, CEO of Candy J. Lee Financial Planning and Money Management in Seattle, Washington, misrepresented the payments she received for her advisory services with respect to the sale of C-shares and was suspended for nine months.
  • Robert A. Magliulo, associated with Vanderbilt Securities in Woodbury, New York, was suspended for six months after he reached a settlement wherein he consented to the finding that he improperly instructed his sales assistant to complete an online continuing education program on his behalf.
  • Kevin M. Nevin of Sandlapper Wealth Management in St. Louis Park, Minnesota, was suspended for one year as a result of his failing to give his firm prior written notice of his clients’ investments in three private placements, which in turn, caused the firm to not record any of those transactions or supervise his activity.
  • Charles E. O’Hara IV, associated with Investors Capital in Newport, Rhode Island, lost the right to use the CFP designation for just over a year after he recommended and sold $400,000 in REITs and partnership interests to a client, solicited personal loans and borrowed $14,650 from clients, but failed to disclose the loans.
  • Swan S. Shen, associated with Holistic Financial & Retirement Group in Burlington, Massachusetts, was suspended for six months through a settlement to resolve allegations that she altered a client’s variable annuity checklist by adding feeds to the signed form; forged customer documents and presented the documents as originals for processing; and provided consolidated reports without firm pre-approval
  • Jacqueline H. Thornhill of Las Vegas was suspended for three months not reporting a FINRA suspension to her firm within 30 days.

According to news sources, the CFP Board also suspended the following four financial advisors, without a hearing, upon receipt of evidence of a conviction of professional discipline:

  • David L. Gabai, a principal associated with Spectrum Financial in West Hills, California, was suspended without hearing after entering into a letter of acceptance, wavier and consent (“AWC”) with FINRA wherein FINRA alleged he “utilized deceptive, fraudulent and manipulative strategies involving the purchase and sale of a stock of which he held a significant personal stake.”
  • F. Christopher Piatt’s CFP designation was suspended without hearing after he consented to a permanent bar from FINRA after he completed a continuing education course for someone else, then later denied it to FINRA and his firm.
  • Jamie D. Pope, an advisor in Winter Park, Florida, received an interim suspension in November after FINRA permanently barred him for having a client invest $60,000 in Pope’s outside business activities.
  • Ronald W. Vaught, a former Raymond James advisor in Melbourne, Florida, was suspended after the Board discovered that FINRA had permanently barred Vaught for failing to notify his firm that a client had named him as successor trustee and beneficiary of a client’s trust, and was found to then have falsified a form allowing him convert the trust’s assets.

Finally, new sources allege that the CFP board issued public admonitions to the following financial advisors for their failure to report technical errors and legal infractions:

  • Sue Ann Appleby, affiliated with Compass Wealth Services in Belvidere, Illinois, was admonished for allowing her clients to sign incomplete electronic fund transfer forms, violating both firm policies and FINRA Rule 2010.
  • Jason K. Chepenik, of Chepenik Financial in Winter Park, Florida, was admonished for failing to report driving-related convictions as required and engaging in improperly registered investment advisory business in Florida.
  • Phillip C. Coad, affiliated with Vermillion Financial Advisors in South Barrington, Illinois, was admonished for misrepresenting his compensation method on the CFP Board’s website.
  • Duncan C. DeWahl, at Delta Capital Management in Maitland, Florida, was admonished for signing the names of six clients on suitability forms and failing to report a FINRA suspension to the CFP Board.
  • Darin Gibson, president of the Burnham Gibson Financial Group in Irvine, California, was admonished for discrepancies between the services agreed to in a client agreement and those provided.
  • Mark E. Rauguth, a financial consultant affiliated with Immaculate Wealth Management in Mesa, Arizona, was admonished for improperly using his broker-dealer’s signature guarantee stamp for non-firm customers and failing to maintain photocopies of the guaranteed documents.
  • Don G. Stamas, founding partner of Defender Capital in Charlotte, North Carolina, was admonished for incorrectly representing his compensation method on the CFP Board website.
  • A CFP Board Enforcement action can result in the loss of the CFP designation. The Attorneys at Lax & Neville have experience representing financial advisors with the Certified Financial Planner designation. If you have received a Notice of Investigation from the CFP Board, contact the attorneys at Lax & Neville LLP today at 212-696-1999.